US President Donald Trump said that up to 75 million barrels of oil will be added to the country’s Strategic Petroleum Reserve, citing rock-bottom prices that only continue to plunge downward, in some cases into the negatives.
“Based on the record-low price of oil … we’re filling up our national petroleum reserves, the strategic reserves,” Trump said at a White House press briefing on Monday. “We’re looking to put as many as 75 million barrels into the reserves themselves, that would top it out.”
West Texas Intermediate (WTI) futures prices hit an unprecedented low on Monday, falling from over $18 per barrel to -$37.63, a 300 percent drop from the previous day’s close and the first time crude futures ever traded in the negative since the New York Mercantile Exchange (NYMEX) opened its doors in 1983.
Oil prices have been dropping for over a month, between a price war instigated by Saudi Arabia – which seems to have been resolved by an OPEC+ agreement to cut production – and the collapse in demand as the coronavirus pandemic continues to wreak havoc on the world economy.
The Strategic Petroleum Reserve was created to lessen the effect of oil supply disruptions during emergencies. It has a total capacity of some 797 million barrels, stored in Texas and Louisiana. As of early March, the reserve contained some 635 million barrels, with the Department of Energy now leasing out some of the extra space to help address a severe lack of storage amid the global supply glut.
Though production disputes among major petrol exporters and a raging world health crisis have played their roles in sending prices to their current level, industry analysts say the real problem now is storage, with few traders willing to take deliveries as they simply have no place to put it.
Asked whether the US would halt oil shipments from Saudi Arabia as storage space dwindles, the president said only “We’ll look at it … we certainly have plenty of oil, so I’ll take a look at that.”
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